Answer to Question 1
B
Answer to Question 2
To simplify pricing procedures and help consumers make merchandise comparisons, some retailers establish a specified number of price lines or price points for each merchandise category. Once the price lines are determined, these retailers purchase goods that fit into each line. This is called price lining. The monetary difference between the price lines should be large enough to reflect a value difference to consumers. This makes it easier for the salesperson to either trade up or trade down a customer. When retailers are limited to certain price lines, they become specialists in those lines. This permits them to concentrate all their merchandising and promotional efforts on those lines, thus defining their store image more clearly. In addition, they direct their purchases to vendors who handle those lines. The vendors, in turn, provide favored treatment to their large-volume retailing customers. Other advantages of price lining include buying more efficiently, simplifying inventory control, and accelerating inventory turnover. From the shopper's perspective, it is easy to shop when price lining is used because differences are perceived among the various price points.
